New Zealand Government Eats its Greens

When John Key was elected Prime Minister of a minority National government in 2008, one of his first acts was to overturn legislation of the defeated Labour government mandating a phase-out of incandescent light bulbs.

National was not to be associated with ‘nanny state’ proscription which ran counter to a Libertarian agenda that included lots of fossil fuel extraction (lignite, coal, oil & gas) and catching up with Australia. We now export graduates there in such numbers that the proportion of the population to have graduated from university has declined by nearly 5% since 2000 cf. the OECD average rise of 4% – Economist).

But over the last few months the tables have turned and New Zealand is making huge green inroads – even while the government has walked out of Kyoto and watered down the already ineffective ETS.

Sculpture Barista Alchemy

Converting swords to ploughshares – the not so good prospects for a carbon intensive economy.

So what has brought about this turn around?

  1. Last December the Brazilian oil giant Petrobras  relinquished it’s expansive Exploration Licences off the east coast of North Island after completing a controversial seismic survey in 2011. While the National cabinet is full of blue sky miners, the reality is that New Zealand has proven a difficult nut to crack for explorers (even in Taranaki) and Petrobras obviously didn’t see anything in the seismic results that suggested easy money. Hopefully this result has cooled the ardour of some cabinet members for the title of Saudi Arabia of the South.
  2. National imposed a carbon tax – due to take effect in July 2013 with a 3 cents a litre petrol tax hike on this and each of the following two years. Of course they didn’t call it that because a tax on carbon would stifle economic activity. This is a strategy to lift government income; raising a projected $300 million to help out the bottom line in a stagnant economy with high unemployment, rising emigration and poor social outcomes. For an economy that is reliant on the slow-to-build stimulus provided by the Christchurch earthquake of 2011, there are few options available other than clawing back tax cuts offered up early in their tenure. Whatever the stated goals of the tax increase, it will effect the overall economy and in all likelihood lead to a reduction in the use of petroleum – one of the goals in the introduction of a carbon tax.
  3. Although the historical high value of the New Zealand dollar has cushioned us from the effects of rising oil prices, this has been cited in combination with low coal prices as the reason for the economic strife of State Owned  Enterprise Solid Energy. The company has ballooning debts of over $389 million and has already, as part of the cost cutting, shelved plans for large-scale lignite mining in Southland. Large tracts of land bought up to facilitate access to the bounty below, are now on the market and are likely to become dairy farms. While New Zealand prides itself on the very high proportion of sustainable energy (hydro and geothermal), Solid Energy’s plans to use low grade lignite in large-scale, energy intensive, fertilizer and bio-diesel applications were going to significantly undercut this standing. These proposals were strongly criticised for both their carbon intensity and the use of an outdated dirty technology.

There can be no question that these events were significant reversals in the government agenda and are likely to impinge on the well-being of all New Zealanders through higher costs and continued reductions in services. The irony is that these are the sort of consequences that it was argued, would prevent us from taking steps to reduce greenhouse gas emissions until everyone else in the world has adopted them. It looks like New Zealand is taking a lead (albeit accidental) – something the Government argued it would never do.

This entry was posted in Environment, Observations, Politics.